Threat of More Rate Hikes? (FOMC Preview)

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Threat of More Rate Hikes? (FOMC Preview): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview – The Fed Could Threaten Rate Hikes
  • Chart – S&P 500: Support, Resistance, and a Downside Target of 4,785
  • BOJ Yen Intervention Update: Not a Market Negative Yet

Futures are lower following mixed international economic data overnight while solid earnings by Samsung Electronics is helping offset negative earnings from European car makers.

In Asia, Chinese PMI data and Australian Retail Sales were net negative, but Eurozone core inflation favorably cooled and GDP firmed easing stagflation worries in Europe.

Today, the busy week of economic data begins with the Employment Cost Index (E: 0.9% q/q), Case-Shiller Home Price Index (E: 0.1%), and Consumer Confidence (E: 104.0) as the Fed meeting gets underway.

Earnings season also remains in full swing with PYPL ($1.24), MCD ($2.70), MMM ($2.08), and KO ($0.69) reporting before the bell and AMZN ($0.81), AMD ($0.61), and SMCI ($5.79) releasing results after the bell.

Bottom line, being the end of the month and the start of the Fed meeting, trader positioning should keep markets relatively quiet today as tomorrow’s FOMC decision looms, but if any of the data comes in “too hot” or “too cold,” expect an uptick in volatility.

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Today’s moves are being driven by the tech earnings

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Today’s moves are being driven by the tech earnings: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Rally as Strong Tech Results Ease Anxiety

“Most of today’s moves are being driven by the tech earnings, which is helping ease the anxiety from Thursday’s results,” Sevens Report Research’s Tom Essaye told Barron’s.

Also, click here to view the full Barron’s article published on April 26th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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There is certainly still a geopolitical fear bid in oil markets

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There is certainly still a geopolitical fear bid in oil markets: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices score weekly gain, breaking run of back-to-back weekly losses

“There is certainly still a geopolitical fear bid in oil markets here with [West Texas Intermediate crude] prices in the low $80s,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. “Geopolitical worries have eased from their most tense levels seen earlier in April as the escalation in the Middle East between Israel and Iran has receded back to a still unsettling, but notably more stable level.”

Without the simmering geopolitical worries, WTI would likely be in the low-to-mid $70-a-barrel range, “at best,” as consumer demand for gasoline has been sliding in recent weeks, while OPEC+ has made no changes to output policy in some time, he said.

Also, click here to view the full MarketWatch article published on Morningstar on April 26th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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Why Stocks Have Really Pulled Back

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What’s in Today’s Report:

  • Why Stocks Have Really Pulled Back
  • Weekly Market Preview:  Will the Fed and Growth Data Make the Pullback Worse This Week?
  • Weekly Economic Cheat Sheet:  A Very Busy Week (Fed Wednesday, Jobs Report Friday)

Futures are slightly higher following a mostly quiet weekend of news as markets digest last week’s gains ahead of a busy and important week of catalysts.

Economically, Spanish Core HICP (their CPI) rose 2.9% vs. (E) 3.3% y/y, offering a positive note on inflation.

Geo-politically, Secretary of State Blinken is in the Mid-East to push for another Gaza ceasefire and oil is down slightly in response.

Looking forward, this is a very busy and important week filled with numerous potential catalysts including Wednesday’s Fed decision and Friday’s jobs report, but the week starts slowly from a data standpoint as there are no notable reports today.

On earnings, we get some important updates from semiconductor companies today and reports we’re watching include: ON ($1.04), NXPI ($3.16), SOFI ($0.01).

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Core PCE Price Index Preview (Next Potential Catalyst)

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What’s in Today’s Report:

  • Core PCE Price Index Preview (Next Potential Catalyst)

Futures are solidly higher following better than expected tech earnings overnight.

GOOGL (up 12% pre-open) and MSFT (up 4% pre-open) posted strong earnings results and that’s leading a rebound in tech stocks and pushing futures higher.

Economically, the Bank of Japan rate decision was slightly dovish as it kept rate unchanged and didn’t reduce QE.

Today focus will be on the Core PCE Price Index (E: 0.3% m/m, 2.6% y/y) and the bottom line is this number needs to be at, or ideally under, expectations to help further fuel the earnings driven bounce in futures.  The other economic report today is the University of Michigan Consumer Sentiment Index (E: 77.9, 1-Yr Inflation Expectations: 3.1%) but barring a jump in inflation expectations, it shouldn’t move markets.

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Here We Go Again: Why Bad Data Isn’t Good for Stocks

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What’s in Today’s Report:

  • Here We Go Again: Why Bad Data Isn’t Good for Stocks
  • EIA Analysis and Oil Market Update

Futures are moderately lower following disappointing tech earnings overnight.

META (down 13% pre-open), IBM (down 10% pre-open) and NOW (down 5% pre-open) all posted disappointing results and tech stock weakness is weighing on futures.

Economically there was no notable data overnight.

Today focus will be on economic data and earnings.  From a data standpoint, Advanced Q1 GDP (E: 2.3%) is the key report and markets will want to see a headline that meets (or slightly misses) expectations and price data that’s in-line or lower than estimates (if that occurs, July rate cuts hopes will rise).  Other data today includes Jobless Claims (E: 215K) and Pending Home Sales (E: 1.0%).

On earnings, there is a deluge of reports today, but the key potential market movers include:  MSFT ($2.81), GOOGL ($1.49), INTC ($0.11), AAL (-$0.28), RCL ($1.30), CAT ($5.12), TMUS ($1.89).

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Gasoline supplied, dropped to the lowest level since mid-February

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Gasoline supplied, dropped to the lowest level since mid-February: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices end lower on weak U.S. gasoline demand

The most notable takeaway from the Energy Information Administration report Wednesday was the weekly implied measure of consumer demand for fuel at the pump, gasoline supplied, which dropped to the lowest level since mid-February, said Tyler Richey, co-editor at Sevens Report Research.

That indicated a “steady and relatively quick pullback” in domestic fuel consumption in recent weeks,” he told MarketWatch.

U.S. gasoline supplied for the week ended April 19 fell by 239,000 barrels a day to 8.4 million bpd.

And that was “not a ‘one-off’ either, as the 4-week moving average of the often volatile gasoline supplied data fell for a third consecutive week to the lowest reading since the week of March 8th,” said Richey. The EIA data showed the four-week average for gasoline supplied, as of last week, down 3.7 million bpd at 8.7 million bpd.

“Those disappointing implied consumer demand figures paired with the smaller than expected gasoline supply draw on the headline poured some cold water on the market…as worries of a persistently tight physical fuel market are beginning to subside,” said Richey.

Also, click here to view the full MarketWatch article published on Morningstar on April 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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The stock-market selloff has removed some of its positive bias

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The stock-market selloff has removed some of its positive bias: Sevens Report Editor, Tom Essaye, Quoted in MarketWatch

Stock-market pessimism is climbing. Why it’s still not bad enough to imply stocks hit a bottom.

Tom Essaye, founder of Sevens Report Research, said the slump in bullish sentiment since November indicates the stock-market selloff has removed some of its positive bias, but that it also implies a return to a “normal” market sentiment.

“It isn’t yet created enough negativity that makes me more confident this pullback is over,” he wrote in a Tuesday client note.

Also, click here to view the full MarketWatch article published on April 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Yields fell and stocks rose following a soft S&P Global Flash U.S. Composite PMI

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Yields fell and stocks rose following a soft S&P Global Flash U.S. Composite PMI: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Wrap Up the Day in the Green

Sevens Report Research’s Tom Essaye told Barron’s that yields fell and stocks rose following a soft S&P Global Flash U.S. Composite PMI.

“It’s kind of a reverse of what we’ve seen in the last two and a half weeks,” Essaye said. “And I think this is something we can expect for the short term. As the market is nervous about higher yields, it’s going to welcome soft data, in so much as it thinks it’ll make the Fed less hawkish.”

Also, click here to view the full Barron’s article published on April 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Today, we’re in a very, very classic ‘bad is good’ reaction to the Flash PMIs

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Today, we’re in a very, very classic ‘bad is good’ reaction to the Flash PMIs: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Weak Manufacturing Data Is Lifting the Stock Market, Sending Yields Lower

Sevens Report Research’s Tom Essaye told Barron’s that though upbeat earnings reports set a positive tone, the market was gaining after the S&P Global Flash U.S. Composite PMI came in lower than expectations. The US Manufacturing PMI fell to a four-month low of 49.9 in April from 51.9 in March.

“Today, we’re in a very, very classic ‘bad is good’ reaction to the Flash PMIs,” Essaye says. “So now you’re seeing yields off and stocks rebound—so kind of a reverse of what we’ve seen in the last two and a half weeks.”

Essaye says the latest earnings reports are helping, though he doesn’t believe it’s the reason stocks are up across the board.

“I don’t think earnings would cause this rally if the PMIs had been strong, or the price metrics were higher or anything like that,” he says. “But given the soft data, I think that earnings are adding fuel to the fire. And I think that’s a positive for markets.”

Also, click here to view the full Barron’s article published on April 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.